The Biden administration announced Thursday that it has reached an agreement with drug manufacturers for all 10 high-cost drugs it entered into negotiations earlier this year, a major step in the implementation of the president’s drug pricing law.
The long-awaited announcement marks the first time Medicare will set the prices it pays for Part D prescription drugs as laid out by a law passed by Congress in 2022.
In a call on Wednesday night, Biden administration officials said the negotiated prices would have resulted in $6 billion in savings for Medicare if they had been in effect in 2023, and will save $1.5 billion for Medicare recipients who pay out-of-pocket costs for their prescription drugs in 2026.
The prices take effect Jan. 1, 2026.
President Joe Biden and Vice President Kamala Harris are expected to tout the news at an event in Prince George’s County, Md. The announcement was timed to occur with the second anniversary of the passage of the law that allowed Medicare to negotiate drug prices.
“These are drugs that millions of seniors and folks with diseases take to treat things like chronic conditions like diabetes, stroke, heart disease, chronic kidney disease, cancer,” said Health and Human Services Secretary Xavier Becerra.
On Thursday morning, the Centers for Medicare and Medicaid Services posted the agreed-to prices for 30-day supplies of the 10 drugs, comparing it to the drug’s 2023 list price. A CMS official told reporters Thursday it is unable to compare the discounts to net prices typically paid by Medicare because that is proprietary information.
For example, the negotiated list price for Stelara — a drug that treats psoriasis, Crohn’s disease and ulcerative colitis — is $4,695 for a 30-day supply.
The list price for the drug was $13,836 in 2023, but that figure doesn’t take into account any other discounts Part D plans were able to get that year.
The Congressional Budget Office had predicted some $98.5 billion savings through fiscal 2031, with $3.7 billion in the savings in the first year alone.
CMS selected the drugs eligible for negotiation last year including Eliquis, a drug produced by Bristol Myers Squibb Co. that prevents and treats blood clots and costs Medicare billions of dollars a year.
About 3.7 million Medicare enrollees take Eliquis, according to CMS, costing the program about $16 billion per year.
CMS negotiated a price of $231 per 30-day supply for the drug. The drug’s list price was $521 in 2023.
CMS does not have to publish an explanation for the maximum fair prices until March 1.
The other drugs that received negotiated prices are Merck’s diabetes drug Januvia, Novo Nordisk’s diabetes drug Fiasp and NovoLog, AstraZeneca’s diabetes drug Farxiga and Immunex Corporation’s rheumatoid arthritis drug Enbrel. Prices were also negotiated for Janssen’s blood clot medication Xarelto, Novartis’s heart failure drug Entresto and Pharmacyclics blood cancer drug Imbruvica.
When negotiating the maximum fair price for the 10 drugs, CMS must consider several factors laid out in the law, including evidence related to therapeutic alternatives, the manufacturer’s research and development costs and whether it has recouped those costs; federal financial support for the discovery and development of the drug and other information.
Negotiations with the drugmakers who produce the 10 drugs picked for negotiations ended August 1.
Manufacturers of the selected drugs had filed several lawsuits against the Biden administration but they have been unsuccessful, allowing the program to continue.
CMS is expected to announce soon the 15 drugs that will be eligible for negotiation beginning next year. Those prices would take effect in 2027.
The announcement comes after CMS proposed a plan to blunt potential Part D premium increases for beneficiaries next year. The premium increases are a result of the drug pricing law’s $2,000 cap on out-of-pocket spending and other changes that require insurers to take more responsibility for covering drug costs.
Senate Finance Committee ranking member Michael D. Crapo, R-Idaho, Energy and Commerce Chair Cathy McMorris Rodgers, R-Wash., and Ways and Means Chair Jason Smith, R-Mo., have asked the Government Accountability Office to investigate CMS’s proposal.
“The policies advanced through the recently announced demonstration would simply shift costs from plan sponsors and enrollees to taxpayers, obscuring the law’s impacts without addressing their underlying drivers,” the lawmakers wrote in a letter to Comptroller General Gene Dodaro.
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